United Community Swings to Loss

With loan trouble continuing to escalate, United Community Banks Inc. in Blairsville, Ga., swung to a $23.1 million operating loss in the second quarter, from a $7.1 million operating profit a year earlier.

It was the fourth consecutive quarterly loss for the $8.17 billion-asset company.

United Community cited the provision for loan losses, which jumped 287% from a year earlier, but fell 8% from the first quarter, to $60 million.

The operating loss excludes a gain of $11.4 million from its June purchase of the failed Southern Community Bank in Fayetteville and the payment of $2.56 million in preferred dividends. Including those items, the company had a net loss available to common shareholders of $18.56 million.

Chargeoffs rose 308% from a year earlier and 35% from the first quarter, to $58.3 million. Nonperforming assets rose 158% from a year earlier and 17% from the first quarter, to $392.6 million, or 4.67% of total assets.

Jimmy Tallent, the president and chief executive officer, said in a press release that those measures do not include any loans from Southern, because "we have substantially eliminated all credit-related exposure associated with the transaction" through a loss-sharing agreement with the Federal Deposit Insurance Corp.

United Community took on roughly $364 million of Southern's assets, but the FDIC must share any losses on $253 million of those assets.

Tallent said only one of Southern's six offices would be closed; the other locations fit well with United Community's existing ones and help fill a gap in southern Atlanta.

The company, which received $180 million from the Treasury Department's Troubled Asset Relief Program in December, stressed that it is well capitalized and expects to remain so even if it incurs further losses.

Still, Tallent said raising capital is an option. "If the credit cycle lengthens, if the economy worsens beyond what our models have assumed, or if there would be compelling reasons to offensively add additional capital, we clearly will do what is best for the long-term success of the company," he said.